New Technology Development on Canadian Jewelry Industry – Part 7

3.3.2 Jewelry Shopping On-Line in Canada

Canadian jewelry industry lags behind many other industries in the use of Internet - commerce. Although for any industry, small or big, online commerce presents enormous opportunities for sales development of new generation through providing online information of jewelry stores making the customer to purchase jewelry products online.

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After analysing data on attendance jewelry sites in Canada, the management consulting company KPMG, has concluded that these four sites visited more often by people of this country by giving in the Internet search query «jewellery».

Currently, the most popular search queries containing the word "jewelry" are 'sterlingsilverjewellery', 'deannagraciejewellery', 'karenwalkerjewellery'. Figure 4 shows the search landscape and the results.

Table 2. The Search Landscape

Jewelry

308,000,000 results

Jewellery

81,000,000 results

jewelry stores

52,800,000 results

jewel quest

2,770,000 results

Jewelers

15,200,000 results

Jewelers

4,130,000 results

jewelry exchange

12,300,000 results

jewel satiate

298,000 results

jewelry boxes

35,400,000 results

According ComScoreNetworks, online jewelry sales through internet sites in November 20010 made up more than $ 80 million, which is 70% more according the same period in 2009 (see Google recommendation on Figure 5). This can be explained by the fact that as a consequence of the financial crisis, consumers were not ready to buy jewelry products from online retailers of worth over $ 5000, and in these days such a trend continues to remain relevant.

Figure 3. Google Recommendations

While searching for Canadian jewelry, Google determines easily the site www.onlineshoppers.ca/jewellery-stores.html. The site provides a list of famous jewelry store that offers a diverse selection of products from gold, silver, platinum and diamonds. On the first place of the site is www.ice.com.

ICE.COM is one of the most popular online jewelry store in North America. Here you can find a wide range of jewelry such as wedding rings, bracelets, earrings, pendants, costume jewelry and more.

Following www.ice.com, the internet site www.bluenile.ca is second site on the polarity.

Blue Nile Canada. Blue Nile Canada offers to choose a wonderful gift. This shop offers a huge range of products for different tastes and preferences of cash.

Jewel crafting keeps pace with the Internet's leading technology solutions inherent in the retail trade and tries to use Internet resources to increase sales.

Blue Nile Canada is one of the reliable online stores. This site is very well recognized in the network, although its ranking in search engines can fluctuate (Search Engine Results Pages). The owners of www.bluenile.ca/jewellery/gifts do their best to benefit from the site links on Google, which gives the site a good advantage over its competitors. Blue Nile Canada focused primarily on men, and believed that their number is gradually increasing, due to the fact that they have previously made online purchases.

peoplesjewellers.com, superjewelry.com

One of the active members in the jewelry industry with extensive experience in online shops selling jewelry are the sites: www.peoplesjewellers.com and www.superjeweler.com. Most other jewelry players on the Internet, such as Tiffany, is using the "pre-shop" strategy to attract customers into their stores, hoping that customers will spend more money in direct sales.

But if you look at Canada's online market, you can note that the market has no dominant player, even when it viewed from the perspective of the world's leaders in the industry. Therefore, even if competition exists, it is not felt so acutely as in some other industries.

3.3.3 Prospects

In Canada online jewelry sales accounted approximately 3% of all sales. This rate of purchases over the Internet is quite high, therefore, according to preliminary estimates; online sales of jewelry in 2015 should make the total cost from $ 200 to 280 million which is about 10% of all sales (see Figure 6).

Jewelry stores increase the activity to make people to buy jewelry online. Nowadays, many jewelry enterprises start to analyze any user clicks on a hyperlink or banner willing to increase the number of people have visited the site of jewelry.

Figure 4. Jewelry Sales Could Reach USD 280 billion by 2015

Using NET Framework, Internet site www.justjewellery.com created with user-friendly interface that makes it easy to access information from large databases. This site was created with the participation of www.ezicommerce.com, however, many standard web innovative solutions are missing.

One of the most active countries by jewelry internet purchases is Australia. The second active participant by purchasing online jewelry is Canada. It should be noted that buying jewelry online in the U.S. is far less popular than in Canada. According Google Trends in 2009, it was a turning point in the search for "jewelry store": people spent much more time for active internet search for the web sites of jewelry stores, than it was as compared with 2008.

The resource such as Internet provides a great opportunity for jewelers who are willing to advertise themselves in a worthy and positive way and impact buyers by making them to purchase their products through the Internet.

3.4 R&B Gem Marketing Inc.

Company Overview

R&B Gem Marketing Inc. is a Jewellery Wholesaler of fine Jewellery, Watches, Precious Stones and Metals. The company, founded in 2001, has experienced rapid growth through sales to major Canadian distribution company network. The company client base includes Wal-Mart, Sears and Zales. It primarily serves the Canadian market. R&B combine expertise in sourcing jewellery, watches and leverage. Well established its relationship with major distribution chains provides high quality product at lower price in the market.

Executive Summary

R&B Gem Marketing is a Canadian Jewellery wholesaler of fine Jewellery, Watches, Precious Stones and Metals based in Toronto. R&B supply directly to major distribution companies and relies on repeat customer sales. The company had been able to sale more than $70 million dollars in 2008 with this catalogue business model. Part of R&B value proposition is product selection and quality, customer service and support, price, reputation, reliability and trust. The company competes favourably his market by focusing on these factors.

The senior management noticed the shift in the market in the last five years. Online jewellery purchase is growing and less and less customers are buying in stores. They identified the online market as an opportunity of growth with the potential to create new source of revenue, increase profitability and gain competitive advantage over the competition.

R&B decided to focus on market development by offering drop shipping service to major e-commerce website. The company plans to further develop the Drop shipping service by offering this service to the existing client base and by supplying more online stores. To do so, the company will need to upgrade his IT infrastructure and spend approximately $80,000 in design and architecture of a new B2B platform.

Scalability and cost are also key factors required in their solution. As they would continue to add more trading partners and more products to the system, R&B needed to manage their costs and have better visibility into how their enhancement will be impacting the system performance. Management project that this implementation will increase the revenue by about 40%. Additional growth opportunity includes diversification.

Seasonality

Retail trade in gems and jewelry is seasonal in nature. Most of the revenue jewelry retailers receive during the period from November to January, especially for Christmas and New Year. Another profitable period falls on Valentine's Day and Mother's Day. As a result, less profitable months for jewelry retailers fall to summer, because there are no holidays during this period, and most profitable months are considered in the fourth quarter.

Target Customer

R&B Gem Marketing targets the middle age, 35+ year old population in Canada. With a population over of 34.2 million, this segment encompasses the fastest growing market with over 12.8% of the population being 45 and older. The rate of growth of the elderly population (persons 65 years old and over) has exceeded the growth rate of the population of the country as a whole.

Environmental Factors

The environmental factors are conditions within and outside R&B organization that may have an effect on the project outcomes. The management team met with analyst to review these factors and evaluate the existing Enterprise IT infrastructure. Figure 7 illustrates business processes of R&B Gem Marketing Inc. “AS IS”.

Figure 5. R&B Gem Marketing Inc. ‘AS IS’

Business Processes Improvement

For optimization business processes, the different activities of the Drop shipping process for the company should be regrouped in seven functions: (1) Import Order process (2) Order Return process (3) Booking process (4) Cancel process (5) Shipping process (6) Billing process (7) Archiving process. Figure 8 depicts the interaction between the processes:

Figure 6. B2B Solution Process Overview

During the analysis phase, it was clear that R&B were facing major issues. First of all, the business needs were not clearly defined. Secondly, the company was lacking internal skills in e-commerce business and technology. In third, there wasn`t enough technical resource available to design, plan execute this project. Finally, the existing information system was not designed to handle electronic transactions. The recommendations we made on Figure 9 presents a high-level evolution analysis of the company’s components.

Figure 7. R&B Gem Marketing Inc. ’TO BE’

The following improvements were proposed:

Built an interface with the Merchant’s system in order to import and process different orders (Sales Order, Cancel Order) according to multiple Vendors’ business rules and to multiple Merchant’s requirements;

Interface with the carrier’s system (FedEx, UPS, USPS...) to perform the shipping process;

Interface with R&B Gem Marketing Inc.inventory system.

Figure 10 shows the components of the new platform and their interactions with the different Trading partners, carriers and R&B legacy IT system.

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